New Chief at First Boston Steps Out of the Background

By ANDREW ROSS SORKIN

Published: June 25, 2004

With the surprise departure of John J. Mack from Credit Suisse First Boston yesterday, Brady W. Dougan, a relatively unknown banker -- at least by the standard of Mr. Mack's reputation -- will take over the volatile firm.

The 44-year-old Mr. Dougan, who started his career as a derivatives trader at Bankers Trust and has worked at First Boston for 15 years, has big shoes to fill. Mr. Mack has a devoted following at First Boston, where some of the most talented bankers were hired by him.

Indeed, Mr. Dougan's most immediate -- and difficult -- task may be trying to retain those bankers, many of whom had endured an enormously difficult transition period over the last two years. And Mr. Dougan was hardly a Mack loyalist. Despite being promoted to co-president by Mr. Mack, he was widely viewed within the firm as being allied with Mr. Mack's predecessor, Allen D. Wheat, who had been unceremoniously ousted. (Mr. Wheat was best man at Mr. Dougan's wedding.)

Many First Boston bankers said they were blindsided by Mr. Mack's announcement that his contract would not be renewed and frustrated with Credit Suisse's decision to name Mr. Dougan, who has very little experience managing client relationships, to the top job. One investment banker described hearing the news as ''getting hit by a two-by-four.''

In an interview, Mr. Dougan acknowledged that the change is ''jarring to people'' and that ''a lot of people are loyal to John'' but insisted that the staff was supportive of the firm's strategy.

''I've talked to a lot of people,'' he said. ''We have a great platform and we can make it even stronger.'' He also appears to be a champion of Credit Suisse's decision against pursuing a major merger, a plan that Mr. Mack had promoted.

''Consolidating mergers have been thoroughly discredited,'' he said, perhaps referring to First Boston's own ill-fated acquisition of Donaldson Lufkin & Jenrette.

Some in the firm thought Mr. Dougan had been lax about the conflicts of interest between research analysts and investment banking during the 1990's boom that got so much of Wall Street in trouble and First Boston in particular.

When regulators were cracking down on brokerage firms' practice of paying stock analysts for bringing in investment banking deals, a Credit Suisse First Boston executive suggested Mr. Dougan might be helpful, according to an e-mail message regulators gathered in their investigation in 2002.

Elliot Rogers, who ran technology stock research for the firm, wrote to Frank P. Quattrone, the firm's top technology banker, suggesting that the technology-stock analysts should report to Mr. Dougan, who ran the stock sales and trading operation, rather than Al Jackson, the director of research.

Until then, Mr. Quattrone had supervised the technology analysts, an arrangement the regulators have since prohibited. In his e-mail message, first reported by The Washington Post, Mr. Rogers called Mr. Dougan ''reasonable'' and said that he ''may be the most palatable workaround assuming he agrees to rubber-stamp compensation numbers.'' Mr. Quattrone's admonishing reply: ''Caveat emailus,'' false Latin for ''Let the e-mailer beware.''

In Mr. Mack's farewell to the firm, he wrote: ''Brady has deep roots at C.S.F.B. and has delivered in a number of roles at the firm, most recently in further strengthening our international operations.''